Big 4 revenue sources: What do we learn?

I have dissected the source of revenues of the big four (Apollo, Blackstone (BC), Carlyle, KKR) in the past. I have now updated it to 2020. The table below shows the full details, and also show why reporting standards are not the same and numbers actually not really comparable (yes, and that’s the largest four, SEC filings etc etc.)

Headline: From 2008 to 2020, the total amount collected in management fees is $26bn. These are net figures, i.e. what was collected after the rebates for portfolio company fees. These not-rebated portfolio company fees sum up to nearly $4.6bn. Note that many argue that portfolio companies do not matter, because they are all rebated against management fees, that this is now standard etc. etc. Well, last two years Apollo collected $200mn, Same for BX (who reports advisory fees separately, and I do not know if that includes some portfolio company fees). Carlyle report (only) $52mn, and KKR beat them all, charging a solid $440mn of such fees. KKR is kind enough to show the offsets, hence we can see how much is actually rebated to investors and the answer is: 60% is offset (so much for the 100% myth).

And now comes Carry. This should be trivial. Well, some report the unrealized one, some not, some report a gross carry minus an allocation to carry pool… whatever this all means. Best guess is a total of $30bn in Carry for these big 4 alone. What is striking here as well is how close the Carry reported by all four is close in absolute value: Apollo $6.3bn, BX $8bn, Carlyle $8.5bn, KKR $7.5bn.

Last two years carry are: Apollo $460mn, BX $1.3bn, Carlyle $525mn (but only realized), and KKR $2bn (and that’s after some deductions; so they seem to be quite a bit above everyone else on this),

So, overall, we have $26bn plus $4.6bn of fixed fees and $30bn of Carry, that is clear 50-50 — which is what I had simulated long ago and back then people said that I was so wrong, so biased, so clueless about the real world, ‘all the money is coming from Carry stupid’ so they said.

And the full file is here. You are welcome.

Phafa Le Hardi Written by: